UNDERSTANDING EMPLOYMENT LAW IN CYPRUS – Legal Realities and Risk Management
by Michalis Severis, Senior Lawyer
Reality: Certain Aspects of a Case
Cyprus offers a balanced legal framework that protects rights, while supporting business growth. Law is mainly based – and is applicable – on facts. Everything spins around the relevant facts of a certain case or situation, especially in the field of Employment Law. Consider, for example, a new employer who has recently established a business in Cyprus or an employee who, after several years is moving to a new company. Perhaps you may be an existing and rapidly evolving company in Cyprus planning to hire multiple employees within a short period of time, or a person entering the Cypriot job market for the very first time.
From the exact point in time at which any of the above scenarios becomes reality, it is of major importance to be aware of some important concepts and aspects, applicable under Cypriot employment law. The reality and true nature of a working relationship is crucial.
Whether you are an employer aiming to stay compliant or an employee facing workplace challenges, understanding legal concepts and factual realities regarding Employment Law in Cyprus, is essential. Navigating this complex area of law with clarity and results-driven guidance is of essence.
Key Foundations of Employment Law in Cyprus
Employment Law in Cyprus, is influenced by both national legislation and European law. Μain sources of Employment Law, include inter alia the Constitution of the Republic of Cyprus, Statutory Employment legislation (such as The Termination of Employment Law), EU Directives and relevant case law, both at the level of Cypriot judicial Judgements/Decisions and at the EU level.
Collective Agreements (when applicable), employment contracts and each employment relationship, are also fundamental pillars that influence and shape the legal reality in Cyprus.
Employment relationships lie at the heart of every successful business and every stable career. In Cyprus, employment law is not a static concept. It develops continuously through legislation, European obligations, and Court/Judicial decisions. However, several disputes and financial losses arise not necessarily due to bad faith, but from misunderstanding legal concepts and realities, obligations and rights.
Whether you are hiring your first employee or resolving a workplace dispute, having legal advice ensures compliance and mitigates risk.
Employment Contracts: A Line of Protection for Employees and a Useful Tool for Employers
A well-drafted employment contract/agreement is not – and should not be – considered as a mere legal formality. On the contrary, it constitutes the first line of protection and an ideal point and way of balancing the most important rights and obligations of the parties, meaning for both an employer and an employee. While Cypriot law does not require an employment contract to be in writing, employers are required to provide a written statement indicating the basic employment terms within one month from the commencement of the employment. Legal advice assists both employers and employees, in correctly drafting and reviewing employment agreements to ensure they reflect their needs and that are in compliance with applicable legislation in Cyprus. Such agreements, address key terms including job descriptions, salary terms, working hours, probation periods (if any), leaves, termination clauses, non-compete or confidentiality clauses and/or agreements.
Drafting a balanced and legally compliant employment agreement that will contain all the necessary terms, pursuant to law and the needs of each case, is equally important for both an employee and an employer, as it defines and specifies the issues that need to be regulated and addressed, in order to avoid (or at least minimize) future disputes, conflicts and misunderstandings.
Working Hours – Payment – Overtime
The standard working week in Cyprus typically ranges between 38 and 40 hours, depending on the industry as well as on any applicable collective agreements. Employees in Cyprus are generally entitled to a minimum of 11 consecutive hours of daily rest, a 24-hour weekly rest period as well as a break if a working day exceeds 6 hours.
Overtime is permitted but should be compensated – if agreed – either by increased pay or by providing time off, depending on the content of the employment contract and the needs of each employment situation. When overtime compensation is intended, then it is of major importance for both the employer and the employee to include proper and specific terms and clauses in the corresponding Employment Agreement in order to avoid future disputes and uncertainty.
Leave Entitlements
In regards to “Leaves”, different rules apply depending on the type of leave concerned, depending on the provisions of the relevant legislation (if regulated) and the policy and practice (if any) of the specific employer.
In general, each employee who:
i) has worked at least 48 weeks within one (calendar) year and ii) his/her salary is determined on a monthly basis, and iii) works on “a five-days a week” basis, is entitled to annual paid leave of at least 20 working days, while employees that work 6 days a week are entitled to annual paid leave of 24 days. At the same time, the matter of increasing (or not) the annual leave days from year to year, it is a distinct matter that can be regulated with a relevant clause incorporated in an employment agreement between an employer and an employee.
Cyprus legislation also provides for other types of Leave, such as the “Carer’s leave” and the “Leave for force majeure reasons”. These types of leave are unpaid, unless otherwise agreed. An employee is entitled to Carer’s leave, without pay, for five (5) working days per year, provided that the need for this, is documented. “Carer’s leave” is the leave obtained in order for the employee to provide personal care or support to persons indicated by the relevant legislation. An employee is also entitled to up to seven (7) working days of unpaid leave for force majeure reasons related to urgent family matters as indicated in the legislation.
Other types of leaves such as Study Leave or even Wedding Leave are matters that are not regulated by Cyprus legislation, but nevertheless this does not prohibit an employer and an employee to properly regulate these categories by an agreement or via policies and/or practices applied.
Maternity Leave is a crucial and important category of Leave regulated by a specific legislation aimed at protecting maternity and family life. Paternity leave, also is regulated by the relevant Cypriot legislation. Sick leave is also an important category of leave subject to statutory requirements.
Some categories of leaves are regulated by law and each category has its own preconditions and eligibility criteria in order to be granted – or obtained – respectively. Some other forms of leave, may be regulated through an agreement between the parties.
Proper implementation of leave entitlements helps to avoid law infringements and future conflicts, while at the same time, strengthening the sense of justice and mutual respect, to the benefit of both employees and the healthy development of a business entity.
Termination of Employment
It would not be an exaggeration to state, that the stage or procedure of the termination of an employment relationship is one of the most sensitive and hot topics in the Employment Law field, from which the most conflicts and disputes between the parties involved, often arise. According to the applicable in Cyprus, Termination of Employment Law, the termination of an employee’s employment by the employer is presumed to have been unjustified and unlawful, unless the employer proves that it falls within one of the specific grounds and reasons expressly provided and listed in the legislation. A specific case of termination, only then could it be considered legal and justified, if it falls within one of the reasons provided by the legislation.
It is important to note that, even where a lawful ground exists, certain procedural requirements must often be followed, such as performance warnings, disciplinary procedures, or internal investigations, in order for a dismissal to be deemed lawful and justified.
Each case is examined and assessed based on its particular facts and Cypriot Case Law provides important and valuable guidance on the correct interpretation and application of the legislative provisions in practice and upon the specific facts of a certain case.
Employers may also be required to provide statutory notice period to employees, ranging from one to eight weeks, depending on the specific facts and circumstances of each case.
An unlawful dismissal may lead to disputes between an employer and an employee, to the initiation of Court proceedings, to the payment of legal fees for the further promotion of the relevant Court proceedings (legal costs) and to the award of a significant compensation to the employee in the event that the Labor Court diagnoses an unlawful dismissal. Most importantly, it forces the parties to spent their most valuable currency: that is «Time». Time can be translated into money, into family moments or other unique moments of life and into the acquisition of significant benefits, either in the context of one’s personal life, or for one’s professional life, or for both.
At Enalian Consulting, we do appreciate every aspect of a situation and provide our assistance and support to employers in implementing lawful procedures including dismissals, with the aim of preventing disputes. We also support employees in understanding their lawful rights, particularly in cases of unlawful dismissals and the important legal steps that need to be followed when facing such unlawful situations.
Resolving Employment Disputes
Even the most well-managed workplaces can experience disputes and conflicts. Whether it is a disciplinary issue, unpaid salaries, a breach of employment agreements or termination issues, Enalian Consulting, provides legal support and consultation through negotiation, mediation, representation before the relevant authorities, including the Cyprus Department of Labor Relations and litigation before the competent Courts.
Early legal intervention, often leads to better outcomes, including settlements and/or compensation. Strategic legal advice adapted to the specific circumstances of each situation, contract drafting, Court and out-of-Court representation, and compliance support to avoid committing criminal offences, violations of legislation, monetary penalties or fines, are among the services provided by Enalian’s team – whether you are managing a team, entering into a new employment agreement or navigating termination procedures.
